Wyndham Hotels Rejects Takeover Approach From Choice Hotels
Proposal made public by Choice Tuesday involves significant business and execution risk, Wyndham executives said
Wyndham Hotels & Resorts WH 10.38%increase; green up pointing triangle rejected an unsolicited $7.8 billion takeover offer from Choice Hotels CHH -4.54%decrease; red down pointing triangle International.
The stock-and-cash proposal, which Choice made public in a so-called bear hug letter Tuesday morning, undervalues Wyndham’s growth potential and involves significant business and execution risks, Wyndham executives told The Wall Street Journal. Wyndham’s board also has concerns over the value of Choice’s stock, they added. Choice’s offer includes 45% stock.
Any deal would carry an extended regulatory timeline given the U.S. government’s aggressive stance on antitrust, with an uncertain outcome that could result in potential franchisee churn and excessive leverage at the combined company, the executives added.
Choice said it made an initial bid for Wyndham in April, confirming a Wall Street Journal report in May. The companies have continued to hold talks privately since then.
Wyndham said that last month it held multiple conversations with its suitor to discuss its regulatory and execution concerns, but that Choice was unwilling to address them.
On Sept. 27, Wyndham said it told Choice it was rejecting the offer.